Nigeria’s stew lacking in oil, and tomatoes: Fuel for Thought

This time last year, the mood in Nigeria was one of unbridled optimism. President Muhammadu Buhari had completed just over a month in office and the countrymen were hopeful, emboldened by his anti-corruption rhetoric.

A year later, the honeymoon is over and the difficulties of Nigeria’s economy and political situation have resurfaced in Africa’s most populous country.

This has especially been the case for the oil sector, which the nation’s budget depends heavily on, as it was hit by the slump in prices and domestically by slow reforms, renewed militancy and large-scale theft from pipelines.

The fall in Nigerian oil output has also coincided with a fall in tomato production. This has led to a major shortage of what is the main staple in Nigerian cuisine, and epitomizes the multi-thronged crisis the country is in.

Nigeria has been through renewed militancy before, and there is no reason why it cannot overcome it again. But with its oil industry in dire need of money and reforms, the tomato shortage is only making matters worse.

Nigerian oil output slumped close to 30-year lows of 1.4 million b/d in May as militant attacks intensified in the Niger Delta, with the emergence of a brazen and dangerous militant outfit calling itself the Niger Delta Avengers.

While oil production including condensates has now recovered to 1.9 million b/d, according to the government, the situation remains volatile and unstable.

In late-June, the Nigerian government and the militants agreed to a 30-day ceasefire allowing Buhari’s administration more time to come up with a comprehensive plan to tackle militancy in the Delta.

But barely 10 days after a 30-day ceasefire deal with the Nigerian government, militants claimed a round of fresh attacks in the country’s Niger Delta in early July, marking a major setback after weeks of respite that allowed Nigeria’s oil output to rebound.

This has proved that a fragile peace deal is not enough and a permanent truce is needed, but the government and the militants know that money will be the deal breaker.

Also, the risk of negotiating a quick settlement could lead to more groups arising demanding money and this needs to be avoided.

Nigeria is paying hundreds of millions of dollars a year to former Niger Delta militants under an amnesty program introduced in October 2009 to help end years of attacks on oil installations.

President Buhari who hails from the north of the country, had followed up on his anticorruption pledge to cut payments made to the militants, which is one of the reasons for the upsurge in violence.

The country’s oil minister for state, Emmanuel Kachikwu, had suggested in May that the government was looking at revamping the amnesty program in the region, “to address the critical issue of neglect by the government and international oil companies.”

An amnesty program could be another temporary solution and maybe the best solution the government has for now but it needs far more than ceasefires or amnesty programs.

Nigeria needs to desperately find ways to deal with the underlying problems of the region in the long term.

In a nation rife with religious, ethnic and regional tensions, and Buhari and his government have their hands full.

Virus devastates tomato crop

As the oil-rich Niger Delta in the south of the country faces renewed militancy, the north of the country is facing another kind of crisis: a tomato shortage.

The oil crisis is now mirrored by the state of tomatoes, and the timing could not be worse.

Tomato production has been ravaged in the past few months due to a virus caused by moths, with swathes of tomato fields destroyed.

Nigeria which is the largest producer of tomatoes in sub-Saharan Africa, produces about 1.5 million tons of tomatoes a year, and just over 900,000 tons were lost due to this virus last month, according to Nigeria’s Ministry of Agriculture.

But despite these crises, Nigeria has proven resilient. Nigerian crude oil exports have remained high in May and June as plentiful oil from inland and floating storage have been exported, despite the steep fall in oil production.

The tomato problem is also being eased due to the discovery of a new pesticide. A little-known vegetable called the snake tomato offers a possible cure.

Once Nigeria solves its security and tomato issues, a bowl of Jollof Rice will surely be devoured in celebration.

AUTHOR BIO

Eklavya Gupte,
Senior Editor, Oil News

Eklavya Gupte is Senior Editor, Europe and Africa Oil News at S&P Global Platts, with a special focus on the African oil markets. Eklavya has over eight years’ experience reporting on the global oil markets, and has regularly reported on OPEC meetings and other major news events.